INVENTORY

Raw
materials consist of Edible Gardens herb product lines and material for IVXXs line of cannabis pure concentrates.
Work-in-progress consists of live plants grown for Edible Gardens herb product lines and live plants grown at Black Oak.
Finished goods consists of IVXXs line of cannabis packaged products to be sold into dispensaries, and Edible Gardens
products to be sold via food, drug, and mass channels.

Cost
of goods sold is calculated using the average costing method. The Company reviews its inventory periodically to determine NRV.
The Company writes down inventory, if required, based on forecasted demand. These factors are impacted by market and economic
conditions, new products introductions, and require estimates that may include uncertain elements.

As
of June 30, 2017 and December 31, 2016, inventory consisted of the following:

The entire disclosure for inventory. Includes, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the classes of inventory, and the nature of the cost elements included in inventory.